Postal Services Bill

My Lords, this amendment seeks to strengthen Clause 32 by tightening the definition of when the universal service does not apply from exceptional to highly exceptional circumstances. I fully recognise that there will always be extreme circumstances under which the universal service need not apply for practical or safety reasons. However, in the context of a privatised Royal Mail and a new regulator, Clause 32(2)(b) is an avenue that could be exploited. The Scottish Affairs Committee has had serious concerns about the potential for this loophole to be exploited. Tim Brown, chief executive of Postcomm, gave assurances to the committee that the current rate of exceptions is very low. He stated: "““There are about 1,400 exceptions for delivery in Scotland and a total in the UK of just under 3,000””." The Minister for Postal Affairs sought to reassure the committee that the clause replicates the current situation and that the way in which it would be applied would not change. He stated: "““This subsection in clause 32 reflects that. It uses language that comes directly from the postal services directive and is ""identical to what was in the Postal Services Bill 2009. It also reflects the current situation. It is not some sort of get-out clause; it is for exceptions only for health and safety, geography and weather””." The Scottish Affairs Committee reached the following conclusion in its December 2010 report, Postal Services in Scotland: "““We recommend that clarification be included on the face of the Bill that this clause should only ever be applied to a very small number of addresses, similar in order to the current number””." In its response to the report, the Government gave the following assurances: "““The Government reiterates the assurances given by the Minister for Postal Affairs in his oral evidence to the Committee and agrees that the number of exceptions should be kept to a minimum—but this system is only workable if we give Ofcom, as the expert independent regulator, the necessary discretion. The Government is not aware of any concerns with the way Postcomm have set up and run the existing system for exceptions and Ofcom have indicated that they have every intention of continuing with the Postcomm system””." We do not think that this goes far enough. Greater assurances that the application of Clause 32(2) will not be extended would give peace of mind to those who fear the erosion of postal services in rural areas. I recognise that, in highly exceptional circumstances, exemptions from the universal service are necessary and that the current level is acceptable. I invite the Minister to give the stronger reassurance that was sought by the Scottish Affairs Committee. I will now deal with Amendment 66 before turning to Amendments 65 and 65A. Amendment 66 seeks to make it clear that in any review of the universal postal service that may take place, the principle of ““one price goes anywhere”” in the UK is maintained. As we know, Clause 33(5) permits the Secretary of State by order to change the minimum requirements of the universal service. In Clause 30, requirement 3 demands, "““affordable prices …. in accordance with””" the uniform public tariff, but that can be amended by the Secretary of State under Clause 33. Clause 33(6) states: "““The provision that may be made by an order under subsection (5) does not include the making of different provision in relation to different places in the United Kingdom””." I am sure Ministers intend that to require a uniform tariff, but a tariff is not mentioned. The European standard does not require a uniform tariff in each country, nor does Clause 35 specify that the prices imposed as part of a universal service provision condition should be universal. A uniform tariff is an essential part of the universal service. It is important to business and to the general public. Amendment 66 seeks only to confirm that a USP condition must maintain the universal service at a uniform tariff and I hope that the Minister can be reassuring on this matter. I turn to Amendment 65 and its supporting Amendment 65A, in the name of the noble Lord, Lord Low. The noble Baroness, Lady Wilcox, told the House at Second Reading: "““We have no intention of downgrading the minimum requirements of the universal service””.—[Official Report, 16/2/11; col. 776.]" The question remains: why does Clause 33 set out the means for the Secretary of State to do just that? Ministers have clarified the scope of the Ofcom market review under Clause 29. Again, the Minister told the House that, "““the review cannot recommend a downgrade of the minimum requirements after 18 months””.—[Official Report, 16/2/11; col. 777.]" Yet it is perfectly clear that Clause 33 allows just that, without any time constraint. It could happen after six, 12 or 18 months. The Delegated Powers and Regulatory Reform Committee of this House expressed concern at the way that Clause 33(5) contains, as it said, "““a significant power which would allow the Secretary of State to alter the minimum requirements for a universal postal service set out in clause 30””." Ofcom can carry out a review of the minimum requirements at any time, at its own initiative or under the direction of the Secretary of State and, the committee said, "““the Secretary of State may then, by order subject to affirmative procedure, amend clause 30. The Secretary of State is not constrained necessarily to follow any conclusions of the review””." Ministers will tell us that this clause provides three locks against change to the universal service requirements, but those could equally be seen as three steps to changing the universal service obligation. Use of this power in Clause 33 could see a reduction of the universal letter service from six to five days a week or remove certain requirements for services to be provided, including a reduced service for the blind and partially sighted. A recent report for Postcomm estimated that Royal Mail’s net cost of delivering on a Saturday, compared with a five-day universal service, is £256 million. TNT in the Netherlands has labelled the universal service as a kind of Jurassic Park that it should get rid of. Without this amendment, the Government will be inviting upon themselves an intense lobbying campaign from Royal Mail’s new owners aimed at both Ofcom and themselves to downgrade the universal service requirements. In Amendment 65 we do not seek to reverse the powers provided for in Clause 33. All we ask for is a five-year transitional period of restraint: restraint to set an atmosphere of confidence for customers at a time of difficult change; and restraint that the Government have already said that they intend to observe. Ministers have, to their credit, listened to representations and tabled amendments to provide similar transitional periods. Under Amendment 69, Ofcom could not choose to review the cost of providing the universal service, as provided for under Clause 42, for five years rather than three. How surprising that similar restraint would not be shown in the centrepiece of the Bill, the universal service. Amendment 65A in the name of the noble Lord, Lord Low, also seeks no diminution in the minimum standards of the universal service for at least five years. This is a test of the Government’s commitment to the current requirements of the universal postal service. All we ask is for five years. After all, five years under the Fixed-term Parliaments Bill is only the duration of a Parliament. If the Government really mean what they say about protecting the universal service, I hope that they will look favourably on these amendments. I beg to move.